Tax Man Feared Hotel Would Close

Norfolk Official Calls Nonpayment Theft

July 11, 1992|By DAVID LERMAN Daily Press

HAMPTON — Hampton's late commissioner of the revenue allowed the Chamberlin Hotel's tax payments to slide for years partly because he feared forcing the financially troubled landmark out of business, according to a trusted colleague and the city treasurer.

As early as five years ago, Taylor C. Wilson Jr. was worried about the condition of the hotel, but equally troubled by its huge backlog of tax debts.

So he sought out the friendly advice of longtime colleague Sam T. Barfield, Norfolk's commissioner of the revenue.

"He talked to me on several occasions about it," Barfield recalled. "He was worried. He was so worried the hotel would fold."

Barfield said Wilson feared the once-grand waterfront hotel, under bankruptcy protection since 1979, would fail if he took legal action to demand payment of back taxes.

"I told Taylor, `You don't have the authority to be lenient.' It's the commissioner's responsibility to collect that money."

And if the debt piled up and word leaked out, Barfield recalled telling his friend, "I said they would hang you out to dry."

Wilson's motives, Barfield said, were good; he simply wanted to help the hotel stay in business. "It just got out of hand."

By the time Wilson died this spring, the Chamberlin Hotel had accumulated a debt of more than $1 million in real estate, meal and lodging taxes.

It wasn't that the hotel never paid taxes. The hotel has paid about $250,000 in delinquent taxes since 1987, mostly for personal property debts, said City Treasurer Robert E. Quinn Jr. Hotel owner Vernon E. Stuart has said the Chamberlin paid over $1 million in city taxes since 1979.

But what troubled Barfield most about the debt was that most of it involved meal and lodging taxes - money the hotel collects from customers and is required to pass on to the city.

"It's a very serious thing," Barfield said. "It's like a bank trust. You can't play around with it and use it for your business. I had discussed this with Taylor Wilson. I gave the best advice I could by saying nobody has the authority to use that money."

According to Barfield, Wilson "said he knew it, but he didn't want to see the business fold."

Quinn confirmed that Wilson had consulted Barfield periodically and that Wilson expressed concerns about the hotel closing if all tax payments were sought. Quinn said he did not know what advice Barfield provided.

Barfield, Norfolk's commissioner for 22 years and a past president of the state association of commissioners of the revenue, said he considers the failure to pay meal and lodging taxes "stealing." He said he seeks to prosecute such cases in criminal court.

A 1973 attorney general's opinion requested by Barfield says the failure to pay such taxes can constitute embezzlement.

Since Wilson's death, Hampton's newly appointed commissioner, Ross A. Mugler, has identified 46 other businesses that are years behind in paying their meal and lodging taxes. Collectively, those businesses now owe more than $500,000 in taxes and penalties.

The commissioner is charged with collecting meal and lodging taxes, but the city code requires that he notify the treasurer within 15 days of a delinquency, so that the treasurer can pursue collection. Quinn said Wilson did not inform him of those delinquencies.

"We do not go by the city code," Quinn said. "I don't know of any case where the information was turned over to the treasurer's office for collection. Taylor said he was doing it personally himself and that he would take care of it.

"He didn't do anything intentionally against the law," Quinn said of Wilson, under whom he once served before becoming treasurer. "If Taylor did anything wrong, it was just that he tried to do too much on his own."

Several officials over the last few days have offered possible explanations for Wilson's apparent hesitancy to crack down on the Chamberlin's tax delinquency. Many noted that the Chamberlin should be considered a unique case because its sits on federally owned land at Fort Monroe, and that the building must be used only as a hotel to abide by a contract with the military base.

The bankruptcy status of the hotel also complicated the matter. Quinn said he could not take legal action to demand payment of real estate and personal property taxes while the hotel was under bankruptcy protection. Stuart has said he paid off all his creditors by 1984, and that the hotel has remained in bankruptcy since then because of its tax debt.

Mayor James L. Eason said Wilson told him periodically that he was working on plans to get the hotel debt paid off.

"There was talk for several years of the Chamberlin being sold," Eason said. "We were told on several occasions that when the sale went through, the money would be paid."

But the hotel was never sold and the debt kept mounting.

Barfield and Eason also said Wilson's efforts to collect the Chamberlin debt was complicated by his long battle with emphysema, which forced him in and out of the hospital over the last few years.